Member Info for Okehurst1

Hi HH

Still Long

Think fiduciary duties override the share price,especially when we need to invest in the business

Ironically premium listing gives us arguably a better boost to the share price as the index funds need 5% of our shares

StevieL

Do you think it’s a good idea to use bank debt to buy back shares ?

We have £180M of debt

£60M of interest

We don’t produce enough FCF to fund rent / interest / capex as it is

Take ASOS, they bought back £50M of shares - stand corrected - and yesterday raised £75M via 20% dilution to basically fund the break cost of one loan / refinance and the annual interest on another, it’s not smart budihedd

If we have any windfall cash it has to be better we repay the debt?

Once the £180M repaid / bond repaid then we are up £60M a year, is that not a better use of cash ?If we had it ?

Genuine question to you btw

Thanks

Still long 1 pencil - THG

Nothing below was negative about THG, I am here for a capital event

Your missing point, Ste was saying we need the directors to buy shares, I don’t think that will have a re rating affect

The capital event is either MBO Apollo style take out or sell a division to fund Ingenuity, either see’s us rerate upwards

Something has to give, it’s not being negative on THG it’s a catalyst for us PI’s to make £££

For Ref I am long THG

Ste,

Let’s agree it’s £135M group Capex - my point is cash at group level isn’t there to support the growth of ingenuity

We need £135M total capex - whichever way it’s cut

£15M rent

£60M finance

£200M of cash required at gross EBITA level

6% margin beauty £1.3B

7%. Nutrition £700M

Less restructuring costs On Demand £M?

Has to be a capital event

Ste

The CFO wasn’t on the call , the stand in was pushed and was pushed on intangible and actually said £135M - as tangible capex is all but done that’s what he said

It was in relation to the question can they turn off Capex over night and the stand in said ‘ yes’ as intangible

Either way £135M whichever you cut it - tangible /intangible - it’s £135M of cash?

Look away O/P :-)

Fair comment btw

Ste, that’s the figure they said on the recent conf call, £135M a year, predominantly Intangible capex

They said 5 years to FCF breakeven with Ingenuity and produced the graphs on the call

Their guidance going forward not mine - worth rewatching

Couple of Ned’s buying shares or Lord Allen ain’t going to cut it , unless they temper the growth of Ingenuity - that doesn’t look likely - then a Capital event has to happen, group FCF can’t carry MM’s £15M rent £60M Interest and £135M capex all in

Ste,

Until Ingenuity funding sorted one way another we stay in limbo ,£135M a year for 5 years is serious cash to grow Ingenuity it’s getting close to current £Mcap with cost of capital

Directors buying a few shares is not going to make a difference they already have a shed load

Once they spin out / independently fund Ingenuity then we have a serious rerate or they sell a business or two, buyback shares and fund Ingenuity same time, who knows MM’s plan

Waiting for that capital event whichever way it goes

8.10am

10% spread whilst market reviews Rev B accounts

Helicopter view

Rev B IPO’d for £500M 2 years ago

£9M of revenue recognition caused the suspension as auditors wouldn’t sign off until full forensic audit

Close to £200M Rev / specialist chemical manufacturing plant

with sales across USA Walmart

BOO take close to 30% for just £15M and with management only need 14% to take full control - we didn’t take near 30% to not control this one

BOO will rerate on the back of this trade as it plays out

The previous management actioned below

evenue recognition

The Company reached a conclusion that sales of approximately £9.6m made in February 2022 to three distributors did not represent revenue as they did not satisfy all elements

of IFRS15, in particular around the extended credit terms offered being materially outside normal terms. These sales were included in the revenue figures published in the Company’s FY22 pre-closing trading update on 6 May 2022.

Subsequent to the trading update, these sales have not been included in the FY22 results.

The Investigation concluded that

the sales were undertaken for the purposes of meeting sales targets for FY22 and that the sales were made at the request of the Company and included stock items that were not needed by the Distributors.

The Board takes this issue very seriously and we have implemented a zero tolerance policy of pulling forward revenue. In addition, cash collection

is monitored daily and customers with substantial overdue balances are put on hold until their accounts are back to operating to terms.

The Investigation also reported that between July and September 2021 two members of the Board at the time had directly or indirectly invested £1m (in aggregate) in one of the Distributors. In addition one of those Directors also provided a £0.3m personal loan to the owners of the other Distributor.

Revenue

During the year, we achieved a significant increase in Group sales, up 35% to £184.6m as compared to the same 12-month period last year, with the business achieving a record fourth quarter of sales. This is a performance which has been driven by the strength of our globally balanced business – across routes to market, geographies, and an increasingly diversified category set.

Bob Holt has done wonders saving this one for shareholders

BOO sitting there Mike Ashley style

Rev B will need to raise funds to recapitalise

25p to 30p could land this one

£200M a year Beauty revenue and the manufacturing facilities

taking our Beauty offering to £350M a year

Let’s see how the next move goes but what a trade by BOO grabbing close to 30% for £15M

Good luck to ASOS but that’s some debt to finance

The BOO BoD really have played a blinder managing a tricky year (2022)

‘1 Including the £275m New Facilities, £500m convertible bond and £22m Nordstrom loan.

2 Total cash financing cost of c.£55m for H2 FY23 includes interest and fees relating to the Existing RCF, convertible bond and Nordstrom loan, interest on lease liabilities, and interest, arrangement and advisor fees relating to the New Facilities. The H2 FY23 incremental cash cost of refinancing related to the New Facilities is now expected to be c.£45m (previously guided at c.£25m at the H1 FY23 results). The expected H2 FY23 interest expense of c.£30m is unchanged’

Done plenty PP1

Follow cash for BOO - FCF doesn’t lie

£91M capex

£15M Rev B

£30M cash left

No debt

Cash in hand

Well respected executive, he’s a safe / honest pair of hands

PP1, not sure what you mean ?

‘With a career spanning more than five decades, Holt has taken senior positions within some of this UK’s most successful companies. He is perhaps most widely known for his pivotal role in the rise of Mears Group PLC. He built the then little-known Gloucestershire contractor up from a £12m business with 83 staff, through floatation on the stock market in 1996, to a £1bn group with over 12,000 staff, operating in the care and housing maintenance sectors.

He is also former Chairman of maintenance contractor Sureserve Group PLC, (formerly known as Lakehouse). Here he further demonstrated his leadership success by completing its major turnaround to deliver a very strong financial performance, overseeing a 125% recovery in Sureserve’s share price. At the time of his recruitment in 2016, the business had a bank debt of £50m.

In that same year, Holt was awarded an OBE for devoting significant amounts of energy and time to charity. In 2008, he set up The Footprints Foundation to help people in need both at home and overseas, including supporting six orphanages in South Africa’

Hi Golden, how’s things ?

£4B - spot on as they told us

Re maintenance capex

Bit of a guess but THG told brokers in January maintenance capex was low dingle £millions, I think BOO will be same

the CFO pretty much inferred said this is last of the lumpy bit

As you and I know if THG just focused on fulfilment centres for Beauty / Nutrition they wouldn’t need to spend £135M a year for 5 years on Intangible SaaS - Ocado esq style

BOO own £135M of real estate and are not paying the CEO £15M a year in rent and have no fixed debt, as always some risk but set up quite nicely to see a bagger from here

Wolf, it’s a good point and I know below is a pure guess but it’s a starting point

We know from employees that THG can handle 540,000 items a day ,call it 375 items a minute , 24/7

They handle beauty / clothes / food items

It’s some volume for every minute of the day, how many staff on 3 shifts to get that level of pick and drop ?

THG robots costs were running at £5M a year cash wise -what they told the brokers last January was in their 2023 budget

Appreciate it’s a rough comparison so could be well out but it’s possible the savings are materiel